Not so long ago, the entire continent of Africa was written off by the business world as a place too risky to invest in. However, mobile technology has completely changed the African narrative.
Africa is now the world’s second largest mobile phone market and is setting the worldwide pace for mobile-based product innovation. The fastest-growing African companies tend to operate in the information and communications technology space, and they cater to an increasing demand for mobile services, digital entertainment, and cloud computing.
Here are five tech companies leading Africa’s economic renaissance:
- PesaPal: PesaPal is a Kenyan company that enables users to shop, pay bills, buy mobile phone credit, and complete school fee transactions online. Dubbed “Africa’s version of PayPal,” PesaPal expanded into Malawi in 2014 and announced that it next planned to target 400 million consumers in Nigeria, Ghana, and Zambia. The company’s success in the online transaction space clearly illustrates the evolving habits of African consumers and typifies how convenience-driven technology can impact consumers and expand market outreach.
- MXit: Namibia-based MXit started out as a simple instant messaging app, but it’s since evolved into a full-blown social network that boasted a peak of 27 million users. The company is giving Facebook a run for its money in particularly developed markets such as South Africa. MXit’s localized social media principles cater to African demographics and create many unique mobile advertising opportunities. Its domesticated approach highlights the extent to which technology can be used to penetrate growing and unique markets.
- iROKOtv: In the 1980s and 1990s, African television was mostly dominated by westernized programming. But with the growing popularity of Nollywood, Nigeria’s movie industry, the tide has recently turned toward African-created entertainment. A Nigerian company called iROKOtv noticed this trend and enabled the digital distribution of African programming. In 2013, the powerful platform secured $8 million in funding from a New York hedge fund, thus signaling serious investment potential in this industry.
- Ushahidi: When we think about tech innovation, we too often think about business and profiteering. Kenya’s Ushahidi is a good example of how innovation can be used as an agent of social change without necessarily targeting the double bottom. The company developed open-source software that collects and maps data for use in civic initiatives and crisis situations. Activists used this software for election monitoring in Kenya, Mozambique, and the U.S., and response teams used it following a disastrous earthquake in Haiti.
- Wyzetalk: South Africa’s Wyzetalk is ushering in a new age of institutional collaboration through cloud solutions. The company is developing new ways of forming synergistic relationships and has received funding from the African venture capital funds Invenfin and Savannah Fund — indicating much potential for growth.
What Do These Companies Teach Us?
Whether you’re looking to invest in these companies or simply learn from their success, here are four main lessons you can take away from Africa’s expanding tech climate:
1. Develop long-term plans based on geography. Not all African markets are equally developed or growing at the same pace. When looking to get in on a frontier space, entrepreneurs need to be strategic and educated on ongoing geographic and economic trends in order to find the venue that provides the best opportunity for their specific idea.
In the 1990s, it was practically unthinkable that a homegrown mobile money platform would drive 42 percent of Kenya’s GDP. Today, Kenya’s mobile finance industry has become a model for both developed and developing economies.
2. Work for social good. The most viable and sustainable business ventures in the ICT space and other industries are those that address day-to-day socioeconomic challenges. Africa is ripe with social-minded companies like M-KOPA Solar, which connects the homes of low-income families in Kenya, Uganda, and Tanzania to solar energy sources.
3. Cater to young demographics. More than 70 percent of sub-Saharan Africa’s population is under 30 years old, and these young people are driving consumption patterns and innovation rates across the entire continent. Capturing this market through localized, innovative products is absolutely essential to a successful investment strategy.
4. Be mindful of disruptive technology. Because Africa’s markets are changing so quickly, products need to be dynamic enough to evolve with consumer needs. Many businesses are rendered obsolete because they’re unable to adapt and keep pace with innovation.
While mobile development is the future of innovation in most economies across the globe, Africa presents a unique opportunity for investors due to its recent emergence as a viable option. Ambitious companies that invest today will reap the benefits of a region that’s set to explode with growth tomorrow.